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Are Atlantans Drowning in Debt?

This week, Experian (one of the three big companies that monitors your credit), released a report showing the average debt for America’s 20 biggest cities (the combination of credit card debt, auto loans, student loans, and personal loans). Interestingly enough, Detroit ended up with the lowest average at $23,604 while Dallas came in with the highest at $28,240.

The U.S. averaged $24,678 for debt per person. Atlanta averaged $26,940 for debt per person, which puts Atlanta almost 10 percent higher than the national average. When compared to Detroit, we have almost 15 percent more debt. Why are Atlantans facing so much more debt than the rest of the country?

Too much debt is a terrible thing. After 2007 we saw debt take down what we thought were unsinkable ships like Lehman Brothers. We all know people who have tested the limits of their credit cards. Once you’re in a certain amount of debt it can even feel impossible to ever pay it off, and it can become a burden on your life and relationships.

With that said, though, debt can actually lead to something positive when it’s handled correctly. For example, borrowing money on education is typically money well spent. Granted, you don’t want to pay 50K a year for a degree in Underwater Fine Arts, but when put towards an education, it is likely money well borrowed. A moderate amount of student loans should lead you to a lifetime of higher earnings. Even borrowing money for a car can be a good investment when the car allows you to obtain a stable job – and earn a living.

It’s important to note that since about 2011, average credit card debt has actually decreased in the U.S.  But overall debt for Atlanta’s has increased.  What gives?  This means that Atlantans are spending more money on student loads and auto loans, and not necessarily with their credit cards for trips to the mall. It also a strong indication that the economy and prospects for living and working in Atlanta are good. We have a burgeoning and diverse economy with businesses/employers like UPS, Delta, Turner, Home Depot, Coca-Cola, Airwatch, CDC, Emory, Southern Company and a whole host of growing enterprises that call Atlanta home. A strong local economy and job market gives consumers the confidence to borrow and spend – with the notion that they will be able to pay back their debt.  

Now, let’s compare the average consumer in Atlanta to that of Detroit.  Is it a bad thing that Atlantans have so much more debt?  Likely not.  Much of this has to do with the stark differences between the local economies.  Detroit is heavily leveraged to the auto industry with GM, Ford, and Chrysler all being top employers.  Residents there understand that they have a heavy dependence on the car industry, and its strong linkage to the health of the local economy and their own economic future. It may very well be a population that is still reeling from the Great Recession – and the added carnage that took place in the auto industry from 2007 and 2009.  Hence, they have less willingness to take on debt for the future.   

So, it makes sense that Atlanta has more debt than the national average, and it’s not necessarily a bad thing. Of course Atlantans need to manage their debt wisely – and the best way to do this is to utilize my T.S.L. methodology. Overall, my take on Experian’s study is that Atlanta’s economy is strong, and we are confident in the future growth of our economy.


 

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